#USDMXN @ 18.3287 sees strong gains on cooling inflation data from Mexico. (Pivot Orderbook analysis)

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• USD/MXN sees strong gains on cooling inflation data from Mexico.
• Weaker PMI and ADP figures suggest potential challenges for the US labor market and economic growth.
• USD/MXN Price Analysis: A daily close above the 20-day EMA could lead to a rally towards the 100-day EMA at 18.8382.

The pair currently trades last at 18.3287.

The previous day high was 18.1821 while the previous day low was 18.0122. The daily 38.2% Fib levels comes at 18.1172, expected to provide support. Similarly, the daily 61.8% fib level is at 18.0771, expected to provide support.

The Mexican Peso (MXN) depreciated vs. the US Dollar (USD) as market sentiment shifted sour. A raft of economic data from the United States (US) and Mexico spurred a jump in the exchange rate. At the time of writing, the USD/MXN is trading at 18.3469

Wall Street is trading mixed, with the S&P 500 and the Nasdaq posting losses while the Dow Jones climb. The USD/MXN is registering solid gains on data from Mexico, showing that inflation is cooling down. Data from INEGI showed that inflation rose by 6.85% YoY, below estimates of 6.90%, as revealed by a Reuters poll. Core inflation, which excludes volatile items, cooled from 8.09% to 8.09% annually.

Last week, Banxico (the Mexican central bank) raised rates by 25 bps moderating the pace of tightening. Analysts expect Banxico to keep rates unchanged at around 11.25%,

On the US front, the ISM Non-Manufacturing PMI dropped to 51.2, which is lower than the anticipated 54.4 and falls short of the previous month’s reading of 55.1. The decline is attributed to a decrease in new orders growth and less robust business activity. Meanwhile, February ADP figures showed private hiring increased by 145K, below the expected 200K, trailing January’s upwardly revised figure of 261K.

Given the latest round of labor market metrics pointing to deterioration, a jump in Initial Jobless Claims for the latest week could open the door for a weaker US Nonfarm Payrolls figure. Analysts predict that the number of payrolls for March will be around 240K, which is lower than February’s figure of 311K.

The USD/MXN appears to have bottomed at around 18.0000. USD/MXN weekly gains above 2% spurred a rise from 17.9644 toward 18.4000, exposing the 20-day Exponential Moving Average (EMA) at 18.3329. A daily close above the latter could exacerbate a rally towards the 100-day EMA At 18.8382, but firstly, buyers need to clear the 50-day EMA At 18.5235. On the other hand, a dip below the 20-day EMA and the USD/MXN could re-test 18.0000.

Technical Levels: Supports and Resistances

USDMXN currently trading at 18.3516 at the time of writing. Pair opened at 18.1366 and is trading with a change of 1.19 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 18.4477, 50 SMA 18.5023, 100 SMA @ 18.9254 and 200 SMA @ 19.5126.

The previous day high was 18.1821 while the previous day low was 18.0122. The daily 38.2% Fib levels comes at 18.1172, expected to provide support. Similarly, the daily 61.8% fib level is at 18.0771, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 18.0385, 17.9404, 17.8687
• Pivot resistance is noted at 18.2084, 18.2802, 18.3783

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